United States District Court, District of Columbia
STUART MILLS DAVENPORT, et al. Plaintiffs,
BAB AK DJOURABCHI, et al. Defendants.
BERMAN JACKSON United States District Judge
Stuart Mills Davenport is the operator and sole owner of Big
Bear Cafe, LLC, a restaurant on the lower level of the
multistory row-house where he and his family live. Am. Compl.
[Dkt. # 9] ¶¶ 7-10.Defendants Babak Djourabchi and
Monica Welt are husband and wife, and they were
Davenport's neighbors. Id. ¶ 13. On
September 21, 2006, defendants loaned Davenport $80, 000, and
in turn, he executed a Promissory Note for Business and
Commercial Purposes ("Note") in favor of
defendants. Id. ¶ 14; Ex. 1 to Am. Compl. [Dkt.
# 9-1] ("Note"). This case arises out of
defendants' efforts to collect on the debt and the
bankruptcy proceedings that followed.
October 14, 2015, Davenport filed for Chapter 13 bankruptcy
protection in the U.S. Bankruptcy Court for the District of
Columbia to prevent a threatened foreclosure on his property
by defendants. Am. Compl. ¶¶ 105-06. Defendants
filed a proof of claim with the bankruptcy court, alleging
that Davenport owed them $121, 813.88 under the Note.
Id. ¶ 120. Davenport objected, claiming that he
owed only $54, 435.00. Id. ¶ 121. The
bankruptcy court held a trial to determine the amount due
under the Note, and on July 21, 2016, it ruled that Davenport
was not in default, and that he owed $53, 557.10.
Id. ¶¶ 122-23; Ex. 9 to Am. Compl. [Dkt. #
9-9] ("Bankr. Mem."); Ex. 10 to Am. Compl. [Dkt. #
9-10] ("Bankr. Order").
and the Cafe filed a complaint in this Court arising out of
defendants' efforts to enforce the Note. See Am.
Compl. Plaintiffs have brought a series of common law and
statutory claims, and defendants have moved to dismiss the
complaint in its entirety pursuant to Federal Rule of Civil
Procedure 12(b)(6). Defs.' Mot. to Dismiss Am. Compl.
[Dkt. # 11] ("Defs.' Mot"). They argue that all
seven counts are barred by the doctrine of res
judicata, and alternatively, that they are legally
defective and factually unsupported. Defs.' P. & A.
in Supp. of Defs.' Mot. [Dkt. # 11-1] ("Defs.'
Mem.") at 1-2.
plaintiffs could have brought their claims in the prior
bankruptcy proceeding, the Court concludes that all seven of
plaintiffs' counts are barred by res judicata.
Therefore, the Court will grant the motion to dismiss. This
opinion should not be interpreted in any way as an
endorsement of defendants' tactics, however.
Davenport filed this lawsuit on December 15, 2016, Compl.
[Dkt. # 1], and filed an amended complaint on February 23,
2017, which added Big Bear Cafe as a second plaintiff. Am.
Compl. The amended complaint alleges the following facts,
which the Court must accept as true for the purpose of
resolving the pending motion to dismiss.
September 21, 2006, defendants loaned Davenport $80, 000, and
he executed a Note in their favor for $80, 000 with interest,
which had a maturity date of September 21, 2016. Am.Compl.
¶ 14; Note. The loan was secured by Davenport's
property at 1700 1st Street, NW, Washington, DC, the location
of Big Bear Cafe. Am. Compl. ¶¶ 8, 16, 21;
see Note; Ex. 2 to Am. Compl. [Dkt. # 9-2]
("Deed of Trust"). Although the Note was made to
Davenport individually and not to the Cafe, defendants and
Davenport understood that Davenport would use the loan to pay
off personal obligations, which would enable him to invest
more in the business. Am. Compl. ¶¶ 15-17.
the terms of the Note, Davenport could not begin to pay the
principal early, unless he paid it all at once. Am. Compl.
¶ 18; see Note. He could and did pay interest
early, though. Am. Compl. ¶¶ 18, 29-30;
see Note. For years, Davenport believed he was
paying money that he owed on the Note, but he was actually
paying ahead of schedule, thereby creating a credit with
defendants towards future obligations. Am. Compl.
to the terms of the Note, Davenport would be in default if he
failed to make a payment and that failure continued for four
days. Am. Compl. ¶ 25; see Note. If he was in
default, defendants could foreclose on his property. Am.
Compl. ¶ 26; see Note. In January 2008,
defendants informed Davenport that he was in default on the
Note because he had fallen behind the payments on his first
mortgage on the property, and that they were accelerating the
Note and requiring him to pay the full principal by September
2008. Am. Compl. ¶¶ 36-38. These terms were not
included in the Note, and Davenport was in fact not in
default. Id. ¶¶ 39, 44. Defendants
threatened to foreclose on Davenport's property if he did
not make a full "lump sum" payment. Id.
¶ 40. They told Davenport repeatedly that he was
required to make additional payments each month, and they
demanded that he provide them with financial information
about the Cafe. Id. ¶¶ 41-49; see
Ex. 11 to Am. Compl. [Dkt. # 9-11] ("Emails").
Davenport complied with most of these requests. See
Am. Compl. ¶ 46. Defendants continued to make demands,
though, and they persisted in their false accusation that
Davenport was in default. Id. ¶¶ 52-53;
filed for Chapter 13 bankruptcy protection in the U.S.
Bankruptcy Court for the District of Columbia on September 2,
2009, which prevented defendants from foreclosing on his
property. Am. Compl. ¶¶ 54-55. The bankruptcy court
approved Davenport's bankruptcy plan, and he continued
making early monthly payments to defendants. Id.
¶¶ 63-66. During Davenport's first bankruptcy
proceeding, defendants filed two proofs of claim, one on
October 19, 2009, and the other on September 3, 2013, both
asserting that Davenport owed only $80, 000 under the Note.
Id. ¶¶ 58, 67; see Ex. 3 to Am.
Compl. [Dkt. # 9-3]; Ex. 4 to Am. Compl. [Dkt. # 9-4], On
November 17, 2014, defendants told Davenport he had been in
default since November 2006. Am. Compl. ¶ 73. It was at
this point that Davenport obtained legal counsel, and
realized he had been over-paying defendants. Id.
March 12, 2015, Davenport filed a Debtor's Corrected
Application in his first bankruptcy case, alleging that
defendants violated the bankruptcy court's orders when
they demanded extra monthly payments. Am. Compl. ¶ 76.
Defendants contested this allegation, claiming that Davenport
had been in default since the execution of the Note.
Id. ¶¶ 77-79. The bankruptcy court denied
Davenport relief and did not decide how much he owed under
the Note; defendants took the position that he owed $114,
568.07. Id. ¶¶ 81-82; see Ex. 5
to Am. Compl. [Dkt. #9-5].
attempted to foreclose on the property in September 2015. Am.
Compl. ¶ 90; see Ex. 7 to Am. Compl. [Dkt. #
9-7]. On October 14, 2015, Davenport filed his second Chapter
13 bankruptcy petition to stay the attempted foreclosure
sale. Am. Compl. ¶¶ 104-07. During the second
bankruptcy case, defendants filed a proof of claim alleging
that Davenport owed $121, 813.88 under the Note. Id.
¶ 120. Davenport objected and argued that he owed only
$54, 435.00. Id. ¶ 121. The bankruptcy court
held a trial to determine the amount due under the Note. It
concluded that Davenport owed $53, 557.10 due to a credit in
his favor, that he had never been in default, and that
defendants' representations regarding how much Davenport
owed, his knowledge, and the claimed agreements between the
parties contrary to the terms of the Note were not credible.
Id. ¶ 123; see Bankr. Mem.; Bankr.
complaint alleges that throughout the parties'
interactions, defendants have harassed Davenport, and that
plaintiffs have suffered as a result of defendants'
misrepresentations and actions regarding the Note. See
Am. Compl.¶¶ 143-47, 156-57, 162, 176-77,
187-88, 193. Count I alleges wrongful foreclosure on
Davenport's property. Am. Compl. ¶¶ 134-47.
Plaintiffs allege that defendants initiated foreclosure when
they knew or should have known that Davenport was not in
default. Id. Counts II and VII allege that
defendants breached their contract with Davenport and Big
Bear Cafe by instituting foreclosure proceedings when
Davenport was not in default on the Note, and that they
breached the duty of good faith and fair dealing.
Id. ¶¶ 148-153, 191-92. Count III alleges
that defendants violated D.C. Code § 28-3301, et
seq., by disparaging plaintiffs' business through
false or misleading representations of material facts.
Id. ¶¶ 158-61. Plaintiffs allege in this
Court that defendants harassed Davenport at work, disrupted
Big Bear Cafe's operations, made baseless and anonymous
complaints to the health department, spread rumors about the
Cafe, and falsely listed the property for sale.
Id.¶\6\. Count IV alleges that defendants
engaged in unlawful trade practices in violation of D.C. Code
§ 28-3901. Id. ¶¶ 164-65. Counts V
and VI allege that defendants tortiously interfered with
plaintiffs' business and caused plaintiffs financial
hardship by instituting wrongful foreclosure proceedings and
conducting in-person sit-ins at Big Bear Cafe. Id.
survive a [Rule 12(b)(6)] motion to dismiss, a complaint must
contain sufficient factual matter, accepted as true, to state
a claim to relief that is plausible on its face."
Ashcroft v. Iqbal,556 U.S. 662, 678 (2009)
(internal quotation marks omitted); accord Bell Ail.
Corp. v. Twombly,550 U.S. 544, 570 (2007). In ruling
upon a motion to dismiss for failure to state a claim, a
court may ordinarily consider only "the facts alleged in
the complaint, documents attached as exhibits or incorporated
by reference in the complaint, and matters about ...